The Observer: Revealed: true cost of the Christmas toys we buy from China’s factories

Undercover investigation alleges hours of overtime, late wages and fines for using the toilet without permission

Workers in the Hung Hing factory, where the basic wage is £132 a month, put in up to 100 hours of overtime in that period

With Christmas three weeks away, an undercover investigation has revealed the bleak realities of life in Chinese toy factories serving a market worth £2.8bn a year in the UK alone.

Big brands such as Disney, Lego and Marks & Spencer pay only a fraction of the shop price of products to the factories that make their toys [see footnote]. Last summer – as factories geared up to cope with demand for the Christmas period – investigators spent three weeks in the industrial cities of Shenzhen and Dongguan. In some cases, they found that employees:

■ worked up to 140 hours overtime a month;

■ were paid up to a month late;

■ claimed they were expected to work with dangerous tools and machines without training or safety measures;

■ had to work in silence and were fined up to £5 for going to the toilet without permission.

Perhaps the most insidious effect of the long hours and poor wages was how it tore families apart, separating mothers and fathers from their children for all but a few days a year. Many workers were too afraid to speak to the investigators from human rights group Students & Scholars Against Corporate Misbehaviour (Sacom), but two women did agree to talk on condition that their names were changed.

Wang Fengping, 27, has two daughters, seven and five. They live a 10-hour train journey away from the On Tai Toys factory. She and her husband earn £200 a month making toys for Disney and others, but cannot afford to bring the children to the city. Instead, the girls are cared for by their grandparents. Wang calls them two or three times a week. The younger one always asks her when she is coming home. “Very soon,” Wang always replies.

The reality is that they will meet only once a year, at Chinese new year. She keeps her spirits up by telling her workmates stories of how well the girls are doing at school. Sometimes she sings them songs the girls have learned at school and then sung to her down the phone. “Our family will not die from hunger, but cannot be fed with this wage level,” she said.

Ma Hui, 25, works for the Hung Hing Printing Group, making items for M&S, Lego and Disney. She has a two-year-old daughter, whom she had to leave behind when the child was just three months old in the hope that she could earn enough to one day return home to set up her own business and reunite the family. She, too, only sees her child once a year and has hung a picture of her daughter on the dormitory wall next to her bed.

Sacom accuses big global brands of failing to pay the factories enough, with workers suffering because factories undercut one another in an attempt to secure contracts. The report also criticises the industry’s own regulator for failing to clamp down on rights abuses.

Spokeswoman Debby Chan Sze Wan said: “In the run-up to Christmas, toys are a popular choice as presents for children. They probably bring joy to consumers and the toy companies, but the workers cannot afford toys or books for their beloved children.

“The hardship of workers is due to the exploitation in the global supply chain. If the brands do not raise the unit price and change their purchasing practices, no structural change in working conditions in the toy industry is feasible.”

Investigators targeted three factories, including On Tai Toys Company, which manufactures for Disney and a number of other international brands, and Hung Hing. All the factories are certified as decent toy manufacturers by the International Council of Toy Industries, which is supposed to police ethical standards in more than 2,400 factories that employ an estimated 1.7 million people worldwide. But Sacom has accused ICTI of permitting “rampant labour rights violations” in factories it has certified.

At the Hung Hing factory the researcher found that the 8,000 workers put in up to 100 hours of overtime a month, far in excess of the legal maximum. Workers say they have to sign a document agreeing to work additional overtime on top of the legal maximum. The basic wage was £132 a month (up to £250 with maximum overtime payments) but wages were paid up to three weeks late.

Workers complained of inadequate training with the factory machines and last year one worker died when he fell into a machine. They said there were frequent injuries and concerns over the chemicals used. There were also complaints about the standard of the dormitories, where water for washing and flushing toilets is turned off at 10pm.

At the On Tai Toy Company the researcher found that most of the 1,500 workers were aged between 30 and 50, though around 300 students are drafted in to help cope with the peak season.

The researcher spent three weeks in the factory and found workers put in up to 140 hours of overtime every month, nearly four times the 36 hours a month legal limit.

Basic pay is £110 a month, but wages were paid a month late, in breach of labour law. During the peak summer season workers could make up to £240 a month, including overtime, but that falls to £140 during low season.

A typical working day during the peak season starts at 8am and does not end until 10pm. Workers routinely put in six-day weeks, but if the factory is busy there are no days off.

Workers complained that they were banned from talking to one another on the production line and were fined up to £5 if they went to the toilet without applying for an “off-duty” permit. They reported regular burns from soldering irons and electric shocks from old hair dryers used to set glue, along with concerns about the effect on their health of unmarked chemicals they have to work with. The law requires the chemicals to be identified and for workers to be instructed in what to do in case of an accident. Up to 10 workers share each 20 square metres dormitory room, which is fitted with bunk beds. Dozens share the toilet and the outside of the building is piled deep with rubbish, which is home to rats.

In response to the Sacam researchers’ allegations, Disney said: “The Walt Disney Company and its affiliates take claims of unfair labour practices very seriously, and investigate any such allegations thoroughly.”

Lego said the investigation into working practices at the factory had raised very serious issues, which it took very seriously and which it had asked its licensing partner, Dorling Kindersley, to investigate.

“Ensuring respect for workers’ rights is very important to the Lego Group and all our partners agree to adhere to a strict set of guidelines – our code of conduct. The Lego Group requires all of its licensing partners to give a written assurance that their vendors, too, comply with the Lego Group’s code of conduct, and to audit their suppliers on an annual basis. Adhering to the code of conduct is something that we prioritise in our engagement with our partners. It appears that in this case the code may have been broken and we are addressing this urgently. Once we have the full facts we will take decisive action.”

Dorling Kindersley said that it was deeply concerned by the allegations and had contacted Hung Hing to express its view: “We have strict ethical sourcing standards covering all the issues identified by this investigation. The allegations, if true, would demonstrate a breach of these standards.” It said the factory had recently been audited, but that would now be reviewed, adding: “Our terms of business are absolutely clear, that any supplier in breach of our ethical standards is required to change their practices or face termination.”

A spokesman for Marks & Spencer said: “We are a very small customer of the Hung Hing Printing Group – less than 0.5% of its business. We take any allegation that suggests a breach of our strict ethical standards very seriously and work closely with all our suppliers, including this factory, to ensure they adhere to our strict standards.”

Hung Hing responded with a four- page letter from general manager Dennis Wong in which it admitted that workers could be asked to do overtime of up to 92 hours a month in July and August. The letter said that last month overtime ranged between 23 and 77 hours. The company said workers who refused to do the extra hours were not penalised.

It blamed late payment of wages on the complexity of calculating the rates for more than 8,000 workers, and argued this was a standard industry practice. It insisted that workers did receive safety training, but warned that individual managers would be held responsible for future lapses and would have pay deducted.

The company said that providing water to the toilets after 10pm was wasteful and that barrels of water were available for workers to use to flush.

* This footnote was appended on 5 December 2011. The LEGO Group has asked the prsee to make clear that books are made under licence using the LEGO brand by the Hung Hing Printing Group. None of the LEGO Group’s toys are manufactured at the site.